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Copper prices surged today as traders calculated the impact on supply caused by the earthquake in Chile, the world’s biggest producer of the metal.

Copper prices on the London Metal Exchange rose $160 to $7,355 a tonne, the highest level since mid-January. At one point during the day, copper prices rose by 6.2 per cent in New York amid fears that metal supplies could be disrupted following the devastation caused by the 8.8 magnitude earthquake that hit Chile on Saturday.

About one fifth of copper mine capacity in Chile — which produced more than five million tonnes of copper last year — was initially shut down by the earthquake but most mines have restarted operations.

Detailed information about the exact state of Chilean infrastructure has been lacking, dealers said, adding to concerns that the country may experience severe disruptions to its biggest export product. Even if mines have survived without collapse, analysts in Hong Kong said, there may be issues with the resumption of shipping from Chilean ports hit by yesterday’s tsunami.

Copper is fundamental to the Chilean economy, representing about half of the country’s $53 billion annual exports. The staggering pace of Chinese construction – boosted by Beijing’s $586 billion stimulus package, meant that Chile met about 50 per cent of China’s record import demand of 3.19 million tons of refined copper last year.

Meanwhile, Rio Tinto said today that it had bought an additional 15 million shares worth C$244.7 million (£156.7 million) in Ivanhoe Mines, which is building a copper mine at Oyu Tolgoi in Mongolia. The acquisition increases Rio’s stake in Ivanhoe by 2.7 per cent to 22.4 per cent.

Production at the mine is expected to start from 2013 and Rio has rights to increase its holding in Ivanhoe to 44 per cent by swapping a $350 million loan for shares.

Andrew Harding, chief executive of Rio’s copper division, said: “Our further investment in Ivanhoe Mines underlines our confidence in the quality of the world-class Oyu Tolgoi deposit and its priority in our project portfolio.”